Question:
Sales volume has been dropping at Winona Publishing Company. During this time, however, the Shipping Department manager has been under severe financial constraints. The manager knows that most of the Shipping Department's effort is related to pulling inventory from the warehouse for each order and performing the paperwork. The paperwork involves preparing shipping documents for each order. Thus, the pulling and paperwork effort associated with each sales order is essentially the same, regardless of the size of the order. The Shipping Department manager has discussed the financial situation with senior management. Senior management has responded by pointing out that sales volume has been dropping, so that the amount of work in the Shipping Department should be dropping. Thus, senior management told the Shipping Department manager that costs should be decreasing in the department.
The Shipping Department manager prepared the following information:
Given this information, how would you respond to seniormanagement?
Transcribed Image Text:
Sales Number of Customer Orders Sales Volume per Order 190 180 170 150 145 136 130 125 Month Volume January $152,000 147,600 144,500 144,000 143,550 136,000 130,650 August 128,000 February March April May June July 800 820 850 960 990 1,000 1,005 1,024